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ACA Supporters Predict Ruling Against Subsidies Won't Go Into Effect

July 22 --Affordable Care Act supporters said a July 22
ruling
by an appeals court overturning an Internal Revenue Service rule
allowing subsidies for health insurance plans bought in ACA
marketplaces run by the federal government won't have an impact on
exchanges or the subsidies, if the court grants an en banc rehearing
that the Obama administration said it will request.

“We will be seeking an en banc review from the D.C. Circuit
Court,” Justice Department spokeswoman Emily Pierce told
Bloomberg BNA in an e-mail July 22. “As that court's order says,
it will not take effect until after the rehearing process concludes.
The Department will be filing a petition for rehearing en banc so
there is no need for the Department to seek a stay.”

The U.S. Court of Appeals for the D.C. Circuit's decision in
Halbig v. Burwell “will never go into effect,” Ron
Pollack, executive director of Families USA, said, predicting that the
full appeals court of 11 judges will likely reverse the 2-1 panel
decision.

Pollack, an ACA supporter, said in a telephone press briefing that
a unanimous
ruling
July 22 by the U.S. Court of Appeals for the Fourth Circuit that
upheld the same IRS rule suggests the U.S. Supreme Court would be
unlikely to take the case. That case is King v. Burwell(see related article).

ACA opponents applauded the D.C. Circuit's ruling, saying it upheld
the language of the ACA. The law states that subsidies would be
available for people buying plans in marketplaces created by
states.

If the D.C. Circuit's decision is affirmed, it will prohibit
distributing federal subsidies to make health plans affordable for an
estimated 5 million enrollees in health plans purchased through the
federally run marketplaces operating in 36 states.

“Halbig did not cause those effects. These are the
effects of the Patient Protection and Affordable Care Act, the statute
that Congress enacted,” Michael Cannon, director of health
policy studies at the Cato Institute, said in a press briefing. Cannon
co-authored an amicus brief supporting the plaintiffs in
Halbig. “If those effects are undesirable, Congress needs
to fix them,” he said. The cost of the subsidies is estimated to
be $36 billion in 2016, he said.

Subsidies 'Make a Critical Difference.'

“Our expectation is that when enrollment begins again Nov. 15
through Feb. 15, people who have not yet enrolled in coverage but are
eligible for subsidies will be able to apply for them and will be able
to receive them,” Pollack said.

“These subsidies make a critical difference in terms of
whether the premiums are affordable,” Pollack said. Under the
ACA, premium tax credits are available to people with incomes between
100 percent and 400 percent of the federal poverty level, and about 85
percent of approximately 8 million people who purchased ACA
marketplace plans for 2014 did so with the help of the
subsidies.

Opposite Predictions on Possible Effects

If the D.C. Circuit ruling stands, Pollack and Jonathan Adler, a
professor of law at Case Western Reserve University who co-authored
the amicus brief with Cannon, predicted opposite effects in states
that haven't created ACA marketplaces. Pollack said that states with
Republican governors that opposed the ACA would move to establish
marketplaces so state residents could receive subsidies.

Adler said in the Cato Institute press briefing that it would be
“difficult for states to establish exchanges if this ruling is
upheld. You'd be asking every state to impose an employer
mandate.”

Under the ACA, large “shared responsibility” payments
are imposed on employers when employees qualify for subsidies in the
marketplaces. Cannon also said that a prohibition on subsidies in
federally operated marketplaces would result in exempting residents in
those states from the law's individual mandate, which requires that
most people have health insurance coverage and has been a major source
of controversy.

White House: No Impact Right Now

“It's important for people all across the country to
understand that this ruling does not have any practical impact on
their ability to continue to receive tax credits right now,”
White House Press Secretary Josh Earnest said about the D.C. Circuit's
Halbig decision at the daily briefing July 22.

“There's a lot of high-minded case law that's applied here.
There's also an element of common sense that should be applied as
well, which is that you don't need a fancy legal degree to understand
that Congress intended for every eligible American to have access to
tax credits that would lower their health care costs, regardless of
whether it was state officials or federal officials who were running
the marketplace.”

There are four different cases on the same issue making their way
through the federal court system, Earnest said. “There is
decidedly mixed legal opinion about this,” with a majority of
decisions favoring the government, he
said.

Final Resolution Far Away

Caroline Pearson, a vice president at health-care consulting firm
Avalere Health LLP, told Bloomberg BNA in an e-mail July 22 that
“it could be more than a year before we have final resolution on
the legal issue.” If the D.C. Circuit's decision is upheld,
Congress could amend the law to allow the subsidies in the federally
operated marketplaces, or states without state-based marketplaces
could establish them. However, “the politics make this
difficult,” she said.

“If all of this fails, the federal government is likely to
pursue an administrative fix that would circumvent the court
decision,” Pearson said. The Department of Health and Human
Services would “effectively deem all of the exchanges to be
state-based, but continue operating them through
HealthCare.gov,” the federal marketplace website.

That would be similar to the approach taken for 2014 for Idaho and
New Mexico, she said. Those two states had been approved to set up
their own state-based marketplaces in 2014 but were unable to do so
because they didn't have adequate technology.

Avalere released an
analysis
July 17 finding that the nearly 5 million Americans who receive
subsidies for federal marketplace plans would receive an average
premium increase of 76 percent if the courts ultimately rule that
consumers in the federal exchange can't receive premium
subsidies.

Congressional Reaction

House Speaker John Boehner (R-Ohio) issued a release saying that
the D.C. Circuit's ruling showed that “the president has
demonstrated he believes he has the power to make his own laws.”
The decision justifies action by the House next week on a lawsuit
challenging the Obama administration's implementation of the ACA, he
said. The pending House action is based on the administration's delay
of the employer mandate, which Republicans say is illegal .

“This is yet more evidence that Obamacare is not working--and
cannot work--for the American people,” Senate Health, Education,
Labor and Pensions Committee ranking member Lamar Alexander (R-Tenn.)
said in a statement about the D.C. Circuit decision. “It is time
for Democrats and the president to realize this and work with
Republicans to start over as rapidly and responsibly as possible with
step-by-step reforms that reduce the cost of health insurance and
expand freedom and choice.”

Sen. Tom Harkin (D-Iowa), chairman of the Senate HELP Committee,
applauded the Fourth Circuit's decision in a statement, saying its
decision “reaffirmed that the law was written to ensure that
financial help would be available on the federal and state
marketplaces.”

To contact the reporter on this story: Sara Hansard in Washington
atshansard@bna.com

To contact the editor responsible for this story: Janey Cohen at
jcohen@bna.com

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